Retailers hit as shoppers save, rather than spend

Sales fell 0.3 per cent last month as shoppers chose to tighten their belts and pay off debt instead.

The growth of internet, mail order and phone sales slowed, while clothing sales flatlined, according the British Retail Consortium.

The figures compare starkly with January 2011, when sales reportedly rose by 2.3 per cent.

The BRC, which represents 60 per cent of retailers, said the decline was driven by slow food sales after the Christmas period, although non-food sales were also weak.

Director general Stephen Robertson said: âCustomers parked their worries in December and spent, encouraged by discounts.

âNow, in the new year, reality has bitten as concerns about jobs, wages and household costs reassert themselves. Despite consumer confidence improving in January, actual spending shows households concentrating on paying off debt, saving and battening down for another tough year.â

The BRC added that sales were largely discount-driven as people waited for clearance deals.

Its findings echo that of the Confederation of British Industry, which recently revealed retail sales volumes fell in January after modest growth in December.

Helen Dickinson from auditor KPMG said: âAfter a stronger than expected December, these figures are rather sobering.

âThe return to negative like-for-like sales is a stark reminder of the challenges facing retailers.

âThe underlying health of the sector remains a key concern, and many retailers are having to rethink their entire business models.â

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